China's economy stabilizes in first quarter

A stevedore works at Qingdao port in Shandong province, July 1, 2015. [Photo/IC]

China's economy has stabilized, according to latest growth data for the first quarter, with an official at the National Development and Reform Commission hailing this as an "auspicious start".

Although still at its lowest point for 25 years, the slowdown of the past two years has been arrested.

Financial institutions are beginning to raise their forecasts for China made at the start of the year.

The GDP growth rate in the first quarter will not fall noticeably lower than last year's 6.9 percent, officials and analysts said.

"Almost all economic indicators improved in March," said an official from the National Bureau of Statistics. The average forecast by economists surveyed by Reuters is 6.7 percent.

Zhao Chenxin, spokesman for the National Development and Reform Commission, said major economic indicators show that the economic fundamentals have improved, although it is too early to say that the economy has started to bottom out.

In the first two months, fixed-asset investment increased by 10.2 percent year-on-year, up by 0.2 percentage points compared with the whole of last year. Investment in new planned projects increased by 41.1 percent in the same period year-on-year, the highest growth since 2010. "The trend has continued in March," Zhao said.

Prices of major raw materials, such as steel, have risen significantly and the producer price index, which gauges factory-gate prices, rose for the first time since January 2014 on a month-on-month basis, he said.

Corporate profits increased by 4.8 percent year-on-year in the first two months, reversing the trend of falling profit last year. It marked the first monthly increase since June, Zhao said.

Home sales and fiscal revenues also picked up in the first two months, the spokesman said.

China's exports rose by the most in a year and import declines narrowed, sending a clearer signal of stabilization in the nation's economy.

Exports rose by 11.5 percent in dollar terms in March year-on-year, compared with a 25 percent fall in February, when business activities cooled due to the weeklong Spring Festival holiday. Imports continued to fall, by 7.6 percent from a year ago, customs data showed.

Premier Li Keqiang said on Wednesday that China's economic growth is "still within an appropriate range and positive factors are increasing", according to a China Central Television report. But he also said that since the world economic recovery is fragile, China still faces challenges.

Normura economists said in a research note that China's railway freight and electricity consumption growth improved considerably in the first quarter, which reflects stabilized industrial production growth.

"These data are consistent with the improvement in trade data and point to a small improvement in real economy growth momentum, especially domestic demand, from stronger fiscal easing and increased property investment growth," the report said.

Keun Lee, an economist at Seoul National University, said he is confident in China's stable growth.

"A growth rate of 6 percent to 7 percent is suitable for China," he said on Wednesday on the sidelines of an economics forum organized by the Institute of World Economics and Politics at the Chinese Academy of Social Sciences. "So long as the decline is gradual, it will not be a problem for China."

Contact the writer at xinzhiming@chinadaily.com.cn